Sometimes being bold can bring you more value than discussing the nitty gritty details for months and then you find the answer but by then the question has changed. This is where we are trying to make a difference and show we can move fast and increase share in market and volume. company profile 2021 company profile 2021 moving fast, so we have a discussion about what to do but each one ends with an action plan that we implement and refine as we go, says Regis Pelerin, Marketing Activation Manager for France and Italy. THE FRENCH MARKET 2.7% points increase in market share in France in May WEEKEND WONDER The focus was on getting customers to overstock as there was an expectation REGIS PELERIN MARKETING ACTIVATION MANAGER FRANCE AND ITALY of hoarding, and to avoid out of stock situations. Further to ensure customers bought Scandinavian Tobacco Group products to provide cash flow, which is even more important in a crisis. It was clear that people would have to work remotely. Sales by telephone was the obvious solution but it posed challenges for reps and customers who were used to dealing with each other in person. This was addressed by providing a script that covered the essentials and biweekly meetings to assess how best to engage with customers in this situation, and how best to motivate reps who were working under pressure. scandinavian tobacco group This was something that previously might have taken us months to discuss and implement, said Christian Grønbech, VP Commercial Excellence. The team and market in cooperation here was quite fantastic they implemented new ways of working over a weekend, introduced new measurements and started to embed it in the organisation. Change is a constant in our industry, and when we face it and have to react swiftly, we can actually do it. 20 By reacting swiftly and clearly and supporting its sales reps, Scandinavian Tobacco Group achieved two important things increasing market share and launching new products by phone, for the first time. In May, there was a market share increase in France of 2.7 %-points, to 51.2%. Importantly, market shares grew for the top two brands, Signature and Meharis and the main premium brand La Paz. LEARN AND GO AGAIN Of course, the first challenge was to keep people safe. The second was, experienced reps had no idea of how to interact with their contacts by phone, including some of the usual best performers. This required training, regular monitoring and sharing of best practice, as everyone learnt from each other including basic things such as avoiding calls during lunchtime for many retailers. Perhaps most important was regular check ins, sometimes with a fun theme such as a competition or a breakfast meeting with a skiing theme, so people didnt feel isolated from colleagues when working from home. Moving from monthly to weekly objectives send a message to sales staff that no one could predict the future, and targets would be adapted as the situation became clearer. Achievable volumes were set in coordination with those on the ground, because it was simply impossible to tell how retailers would react and orders could differ widely each week. Firstly, sustainable growth is a consequence of the right people with the right equipment and right motivation and that meant keeping everyone on board and engaged and motivated in this unknown situation, says Petersen. Then its about agility. Each discussion should end up with an action plan to show we can move fast and increase share in market and volume. You cant have a plan 100% ready to go in the current situation its about execution. Try something and if it fails, fail fast, learn from it and try again. LAURIE RÆBILD DIRECTOR TRANSFORMATION MANAGEMENT OFFICE JURJAN KLEP PRESIDENT AND SENIOR VICE PRESIDENT EUROPE BRANDED DIVISION INTEGRATION THE KEY INGREDIENT FOR A SUCCESSFUL ACQUISITION The acquisition of Agio Cigars is the largest in the history of Scandinavian Tobacco Group. Once the deal was closed in 2020, the priority became integrating quickly to efficiently add value to the combined business. The process is going well, and there are some lessons which can be applied to future acquisitions. scandinavian tobacco group On Thursday 12 March, International Channel Development Manager Michael Seier Petersen and Competence Development & Implementation Manager Peter Brüggemann were appointed to lead a COVID-19 taskforce. They had to be ready to brief Scandinavian Tobacco Groups markets on Monday 16 March on how they were going to handle the coming lockdowns across Europe. Continues 21 OUR MUST- WIN BATTLE STORIES A TRANSFORMATION TO LEAD BUSINESS GROWTH P. 16 HOW TO SELL CIGARS IN A PANDEMIC P. 19 INTEGRATION THE KEY INGREDIENT FOR A SUCCESSFUL ACQUISITION P. 21 KEEP IT SIMPLE P. 24 PLANNING THE UNPLANNABLE P. 26 company profile 2021 company profile 2021 CONTENTS WELCOME 2020 has been an extraordinary year with COVID-19 changing our lives fundamentally and creating unprecedented challenges for businesses. PAGE 04 A TRANSFORMATION TO LEAD BUSINESS GROWTH Scandinavian Tobacco Groups North America Online & R company profile 2021 WELCOME A GLOBAL LEADER IN CIGARS 2020 was yet another transformative year. We accelerated the modernisation of our company, announced the biggest acquisition in the history of our Group and launched a new strategy, Rolling Towards 2025. NIELS FREDERIKSEN President and CEO 2 These articles will give you a sense of the hard work, dedication and innovation of our employees, whose efforts are enabling us to overcome the unprecedented circumstances we are working in around the world, to create value for the company, our employees and shareholders. I hope you enjoy the read company profile 2021 company profile 2021 OUR VALUE CHAIN 1 2 IT STARTS WITH A SEED All tobacco starts with a seed. The development of a tobacco plant depends on factors such as soil, sun, rain, position of the leaf on the tobacco plant and the time of harvesting. Our cultivation activities take p NET SALES 8,006 DKK million EBITDA BEFORE SPECIAL ITEMS 6.6% Organic growth DKK million Organic Growth DKK million Organic growth DKK million 16% 6,000 4% 1,500 8% 4,000 0% 1,000 0% 2,000 -4% 500 -8% 0 2018 2019 -16% 2018 2019 FREE CASH FLOW BEFORE ACQUISITIONS NET PROFI company profile 2021 OUR BRANDS AND PRODUCTS FINE-CUT TOBACCO Our handmade cigars are rolled at our sites in three of the worlds most significant tobacco-growing countries: the Dominican Republic, Honduras and Nicaragua. Our fine-cut tobacco is predominantly manufactured at our site in Holstebro In the course of 2020, we conducted a review of Scandinavian Tobacco Groups corporate strategy. The result was a new company profile 2021 company profile 2021 OUR STRATEGY PURPOSE VISION CRAFT THE RITUALS THAT MAKE US MORE BE THE UNDISPUTED, GLOBAL LEADER IN CIGARS updated strategy Rolling company profile 2021 company profile 2021 Were bringing together responsiveness, design, loyalty and personalization to create an overall unique proposition, which is more sophisticated and provides a better consumer experience CASSANDRA SMELKO, DIRECTOR STRATEGY AND TRANSFORMATION, NORTH AMERICA PURSUING NEW GROWTH The modernisation of the online platforms is being implemented in 17 workstreams, such as Personalized Marketing, Website Redesigns and Consumer Profiling. The five business units will address the unique preferences of the eight distinct consumer segments and their purchasing pa Sometimes being bold can bring you more value than discussing the nitty gritty details for months and then you find the answer but by then the question has changed. This is where we are trying to make a difference and show we can move fast and increase share in market and volume. company profile 2 Scandinavian Tobacco Group aims to grow, strengthen its brand portfolio and leverage its costs through successful mergers and acquisitions, and the integration of its largest acquisition to date Agio Cigars, a leading European company with 3,200 employees bodes well for the future. In fact, as Sen EMPOWERMENT AND AGILITY Data has become less transparent and processes have become more complicated as Scandinavian Tobacco Group has expanded through acquisition of familyowned companies, each using its own legacy system and data structures. The overall aim of these processes and structures is the Across three continents, 14 production facilities and above 6,500 employees, the efforts of the Operations team have made Scandinavian Tobacco Group an industry leader in how to tackle the pandemic and ensure safe working conditions all while increasing production at the same time. The companys fac company profile 2021 company profile 2021 2 BLEND OUR STRENGTHS OUR VALUES OUR PEOPLE TARAN SALABSKY DIRECTOR OF CREATIVE OPERATIONS Each individual throughout the Group has a unique skillset and perspective. Sharing these skillsets has been key to our past successes and will be instrumental in RETAIL EXPANSION During 2020, we opened three new cigar Super-stores in the US; in Fort Worth, Texas and Tampa and Lutz, Florida. In 2020, we adopted our first CSR strategy focusing on four areas, each with its own defined ambitions, activities and goals. Those focus areas are: PEOPLE & COMMUNITI SCANDINAVIAN TOBACCO GROUP A/S Sandtoften 9 2820 Gentofte Denmark CVR 31 08 01 85 Make www.st-group.com